7
Conceptual framework: a problem of incentives in a segmented health system The poor and vulnerable The non-poor formal sector The non-poor informal sector  Health-related incentives to mis- represent income and qualify as poor  Health-related incentives to exit formal sector and become informal  Adverse selection Benefits package Premium  High administrative collection costs Services  Low enrollment What should be the benefits package for the informal sector? What should be the premium / How should it be financed? 7

8
COUNTRY AND REGION CASES 8

9
Community Based Health Insurance (CBHI) In Africa and Asia, CBHI has advanced objectives of improved financial protection and accessibility. Yet Scaling up of CBHI has been slow and population coverage remains low, excepting Rwanda and Ghana. Enrolment mostly voluntary, leading to adverse selection. CBHI not an effective solution to the problem. 9

15
Chile ISWs = 1/3 of labor force. Chile’s relies on SHI and has reached UHC with two- tiered health system: o Large public insurer Fonasa covers 80% of Chileans. o 5 private insurers known as Isapres cover another 17%. o Remaining population covered by Armed Forces or other systems. Enrolment in SHI: contribution of 7% of his/her salary or income to either Fonasa or an Isapre. The indigent can get coverage from Fonasa (but not from Isapres) without making any contribution. 15

17
Chile 2010: 36% of Fonasa beneficiaries classified as indigent. Fraud reduction by Fonasa:  10% of its indigent affiliates were ISWs under-reporting income. To join Fonasa, independent workers to demonstrate contributions to pension fund in 6 of last 12 months on: all dependent and independent workers legally obligated to contribute to the pension system, and other social security benefits; total contribution to SHI to represent 21% of worker’s declared income. Isapre beneficiaries seeking care from public hospital are electronically identified and either denied care or the hospital bills the respective Isapre. Individuals w/o coverage seldom denied care in public hospitals; encouraged to join Fonasa. 17

21
Vietnam Informality very high in Vietnam: 75% of 46 million workers are ISW. Health Insurance Law of 2008 mandates enrolment for all citizens with SHI, Vietnam Social Security. The 2008 Law envisioned that farmers would have SHI coverage by 2012 and remaining groups of the informal sector by To promote enrolment in SHI: o Some groups, including the poor, minority ethnic groups, and households living in disadvantaged areas are not required to make any contribution to SHI. o Government subsidizes 70% of a flat premium for the near poor and 30% for medium income farmers. High income farmers are required to contribute the full premium. While SHI beneficiaries can use both public and private providers, public providers are dominant in Vietnam (e.g., 95% of all hospital beds are public). 21

22
Vietnam ISWs and formal sector workers with SHI coverage have the same benefit package and official level of copayment (20% of health care cost). Copayment for the poor is only 5% There is no ceiling for copayments by SHI beneficiaries By 2012, about 60% of ISWs were covered by SHI. Problems: Low quality of public primary health care network discourages enrolment in SHI by some ISWs. The 70% premium seems to constitute a financial barrier for enrolment for the near poor. SHI confers limited financial protection because of a lack of ceiling for copayments and also because public providers demand high informal payments. 22 Source: Tram Van Tien (2012) Social Health Insurance in Vietnam: WBI Flagship Course.

24
Conclusions No country has come up with effective ways of covering ISW while at the same time collecting contributions from them. Large amounts of public subsidies are required to enroll/cover ISWs. A solution seems to be the adoption of smaller benefits package for ISWs than for FSWs: o Otherwise incentives to become informal arise; o Also, government cannot subsidize a large benefit package for so many people. Benefit package for the poor often smaller than for ISWs to prevent ISWs from attempting to pass as poor. Strong beneficiary identification systems required. Mechanisms to keep the non-poor from getting free health care in public facilities must be developed. Methods for linking health contributions to other social contributions seem to be effective in reducing evasion and elusion. Covering ISWs with meaningful benefit package will take decades and vast amounts of public subsidies. Do not expect to collect much in the form of ISWs contributions to health. 24